New-Home Prices are Red Hot

April 23, 2015

Two different segments of the housing market are giving out two different price trends, writes real estate reporter Kathleen Madigan for The Wall Street Journal.

Though existing home prices were deemed “unhealthy” by NAR chief economist Lawrence Yun, who said the 8 percent price gain compared to 2 percent income gain is unsustainable, it is still nothing compared to the accelerated rise of new-home prices.

Based on data from economists at TD Securities, new homes generally command a 10 percent to 20 percent premium over existing houses because of more up-to-date amenities. But by 2014, the price gap between new and existing houses had widened to 40 percent.

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